Dime Bancorp's senior management team will begin a series of visits to major institutional shareholders today in an effort to thwart a hostile bid from North Fork Bancorp and rescue a merger deal with Mahwah, N.J.-based Hudson United Bancorp.
The road trip, which is starting just six days before a scheduled special meeting at which Dime shareholders are to vote on the Hudson deal, was necessitated by North Fork's unsolicited eleventh-hour offer of $1.88 billion for Dime.
North Fork, which is based in Melville, N.Y., launched its bid late Sunday, urging Dime shareholders to turn down Hudson. FleetBoston Financial Corp. is backing North Fork with a $250 million investment.
Some Dime shareholders had long fumed that they were not getting a premium in the Hudson deal, and the North Fork bid has intensified their opposition to it, according to some of those shareholders.
"I'm voting no and I'm telling all of my friends to vote no," said a portfolio manager for an institution that owns more than one million Dime shares. He asked not to be identified.
Dime's and Hudson's managements said in separate statements that they remain committed to their deal.
But the situation is growing increasingly bitter. Dime released a statement late Monday saying its board had considered and unanimously rejected North Fork's offer "both strategically and financially" and urged Dime shareholders to vote in favor of the merger with Hudson.
"North Fork's 1980s-style hostile bust-up attempt is inadequate," said Lawrence J. Toal, Dime's chairman and chief executive officer, in the statement. The offer "strongly suggests that the real purpose lurking behind North Fork and FleetBoston's efforts is not to acquire Dime, but to disrupt Dime's proposed merger with Hudson United and thereby prevent Dime from becoming a stronger competitor."
In response, North Fork chairman and chief executive officer John Adam Kanas said Tuesday that Dime's statements "would be humorous if they weren't so costly to the shareholders."
A big issue appears to be "golden parachutes" that would be awarded to senior executives in the Dime-Hudson combination. Several shareholders expressed anger over the contents of the Dime-Hudson combined proxy, which promised big payouts to Mr. Toal and Kenneth T. Neilson, chief executive officer of Hudson.
Mr. Toal is to receive at least $1.07 million annually for life, starting from age 65, according to the proxy. In addition, he would receive perks such as club memberships, and he would have options to buy 150,000 shares in the new company, Dime United.
Mr. Neilson was to receive at least $750,000 annually beginning at age 55. He also would receive a car and driver for transport to his new offices in Manhattan, club memberships, and other perks.
After the proxy appeared, Mr. Kanas said, "I was less convinced than ever that it would be a successful merger." North Fork holds almost 700,000 of Dime's roughly 110 million outstanding shares.
Another portfolio manager for an institution that owns more than one million Dime shares said the board's unanimous opposition to the North Fork offer could backfire. "If the shareholders vote as a majority against this transaction, it has got to be humiliating for the board," he said.
Related Link:
North Fork Bancorp's top institutional holders (Source: Marketguide.com) Dime Bancorp's top institutional holders (Source: Marketguide.com) Hudson United Bancorp's top institutional holders (Source: Marketguide.com)
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